Net revenues increased 39% on top of a 22% increase for the same
period last year

Comparable store sales increased 29% on top of 29% growth for
the same period last year

Direct revenues increased 47% on top of a 24% increase for the
same period last year

Adjusted operating income increased 299% to $23.9 million from $6.0
million for the same period last year; GAAP operating income of $23.9
million compared to $2.0 million for the same period last year

Adjusted net income increased 389% to $13.0 million from $2.7
million for the same period last year; GAAP net income of $9.5 million
compared to $1.7 million for the same period last year

Adjusted diluted earnings per share increased 357% to $0.32
compared to $0.07 last year; GAAP diluted earnings per share of $0.23
during the period

Gary Friedman, Chairman and Co-Chief Executive Officer, said, “We are
pleased to report another quarter of record financial results. Our
exclusive products, dominant assortments, taste and style continue to
resonate with consumers across all channels. We delivered 39% growth in
total revenues driven by a 47% increase in direct revenues, and 29% comp
store sales growth on top of 29% in the year ago quarter. We believe
that the significant growth in our direct and total business provides
the initial data points demonstrating that the most recent evolution of
our Source Book strategy was a highly profitable decision. The strong
top-line growth coupled with advertising savings and operating leverage
drove a 390 basis point increase in adjusted operating margins and 389%
growth in adjusted net income during the quarter while we continued to
invest in our infrastructure and new businesses to support our future
growth.”

Mr. Friedman continued, “Based on our strong performance during the
third quarter and continued confidence in the fourth quarter, we are
increasing our fiscal year 2013 guidance.”

Carlos Alberini, Co-Chief Executive Officer, commented, “The
transformation of our real estate continues to be our highest priority
and represents a tremendous opportunity to unlock the value of our
dominant assortment. Our five Full Line Design Galleries continue to
exceed our expectations. We remain on track with our plan to open Full
Line Design Galleries in Greenwich, Los Angeles and Atlanta in 2014 and
anticipate opening 10 or more locations per year beginning in 2015.”

Three Month Period Financial Results

Revenue - Net revenues for the third quarter of fiscal 2013
increased 39% to $395.8 million from $284.2 million for the third
quarter of fiscal 2012. This is on top of a 22% increase in net revenues
for the third quarter of fiscal 2012.

Comparable store sales increased 29% for the third quarter of fiscal
2013. This growth is on top of an increase of 29% in comparable store
sales for the third quarter of fiscal 2012.

As of November 2, 2013, the Company operated a total of 70 retail
stores, consisting of 62 Galleries, 5 Full Line Design Galleries and 3
Baby & Child Galleries, as well as 17 outlet stores throughout the
United States and Canada. This compares to a total of 73 retail
stores, consisting of 69 Galleries, 2 Full Line Design Galleries and 2
Baby & Child Galleries, as well as 12 outlet stores open at the end of
the third quarter of fiscal 2012.

Direct revenues increased 47% in the third quarter of fiscal 2013.
This growth is on top of the 24% increase in direct revenues for the
third quarter of fiscal 2012.

Operating Income (Loss)* - Adjusted operating income for the
third quarter of fiscal 2013 increased 299% to $23.9 million compared to
$6.0 million for the third quarter of fiscal 2012. Including the impact
of non-recurring and other items, GAAP operating income for the third
quarter of fiscal 2013 was $23.9 million compared to GAAP operating
income of $2.0 million for the year ago period.

EBITDA* - Adjusted EBITDA for the third quarter of fiscal 2013
increased 136% to $30.6 million compared to adjusted EBITDA of $13.0
million for the third quarter of fiscal 2012. Including the impact of
non-recurring and other items, EBITDA for the third quarter of fiscal
2013 was $30.6 million compared to $8.6 million for the year ago period.

Net Income (Loss)* - Adjusted net income increased 389% to $13.0
million for the third quarter of fiscal 2013 from $2.7 million for the
third quarter of fiscal 2012. Adjusted net income is calculated using a
40% effective tax rate. GAAP net income for the third quarter of fiscal
2013 was $9.5 million compared to GAAP net income of $1.7 million for
the third quarter of fiscal 2012.

Earnings Per Share* - Adjusted diluted EPS increased 357% to
$0.32 for the third quarter of fiscal 2013 from $0.07 for the third
quarter of fiscal 2012. GAAP diluted EPS for the third quarter of fiscal
2013 was $0.23. GAAP diluted EPS of $1,685 for the third quarter of
fiscal 2012 is not a meaningful number as it is based on a limited
number of shares outstanding and does not include the impact of the
Company’s November 2012 initial public offering (IPO) or the
reorganization of the Company’s capital structure in connection with the
IPO.

Nine Month Period Financial Results

Revenue - Net revenues for the nine months ended November 2, 2013
increased 36% to $1.079 billion from $795.0 million for the first nine
months of fiscal 2012. This is on top of a 22% increase in net revenues
for the first nine months of fiscal 2012.

Comparable store sales increased 31% for the first nine months of
fiscal 2013. This growth compares to an increase of 29% in comparable
store sales for the first nine months of fiscal 2012.

Direct revenues increased 39% in the first nine months of fiscal 2013.
This growth is on top of the 25% increase in direct revenues for the
first nine months of fiscal 2012.

Operating Income (Loss)* - Adjusted operating income for the
first nine months of fiscal 2013 increased 130% to $62.6 million
compared to $27.2 million in the first nine months of fiscal 2012.
Including the impact of variable and one-time non-cash stock-based
compensation charges, costs related to the Company’s follow-on offerings
and other non-recurring items, GAAP operating loss was $3.4 million
compared to GAAP operating income of $19.6 million for the year ago
period.

EBITDA* - Adjusted EBITDA for the first nine months of fiscal
2013 increased 73% to $82.6 million compared to adjusted EBITDA of $47.9
million for the first nine months of fiscal 2012. Including the impact
of variable and one-time non-cash stock-based compensation charges,
costs related to the Company’s follow-on offerings and other
non-recurring items, EBITDA for the first nine months of 2013 was $16.6
million compared to $39.0 million for the prior year period.

Net Income (Loss)* - Adjusted net income increased 158% to $35.1
million for the first nine months of fiscal 2013 from $13.6 million for
the first nine months of fiscal 2012. GAAP net loss for the first nine
months of fiscal 2013 was $8.4 million compared to GAAP net income of
$15.6 million for the year ago period.

Earnings Per Share* - Adjusted diluted EPS increased 135% to
$0.87 for the first nine months of fiscal 2013 from $0.37 for the same
period last year. GAAP diluted EPS during the first nine months of
fiscal 2013 was a loss of $0.22. GAAP diluted EPS of $15,573 for the
first nine months of fiscal 2012 is not a meaningful number as it is
based on a limited number of shares outstanding and does not include the
impact of the Company’s November 2012 initial public offering (IPO) or
the reorganization of the Company’s capital structure in connection with
the IPO.

Outlook

The Company is providing the following guidance for the fourth quarter
of fiscal 2013:

Net revenues in the range of $490 million to $500 million

Adjusted net income in the range of $34.3 million to $35.5 million

Adjusted diluted EPS to a range of $0.82 to $0.85

Diluted shares outstanding of 41.6 million compared to prior guidance
of 42.2 million diluted shares outstanding

The Company is increasing its guidance for the fiscal year ending
February 1, 2014:

Net revenues in the range of $1.57 billion to $1.58 billion

Adjusted net income in the range of $69.4 million to $70.6 million

Adjusted diluted EPS in the range of $1.71 to $1.74

Diluted shares outstanding of 40.5 million compared to prior guidance
of 41.7 million diluted shares outstanding

Note: The Company’s adjusted net income and adjusted diluted earnings
per share guidance does not include certain charges and costs such as
for unusual items which are expected to be similar in future periods to
the kinds of charges and costs excluded from adjusted net income and
adjusted diluted earnings in prior quarters. The Company’s fiscal year
2013 will include 52 weeks compared to fiscal year 2012 which included
53 weeks.

Conference Call and Webcast Information

Restoration Hardware Holdings, Inc. will host a conference call at 2:00
p.m. PT (5:00 p.m. ET) today to discuss the third quarter results.
Interested parties may access the call by dialing (866) 394-6658 (United
States/Canada) or (706) 679-9188 (International). A live broadcast of
Restoration Hardware’s quarterly conference call will also be available
online at the Company’s website www.restorationhardware.com
under Investor Relations. A replay of the conference call will be
available through December 27 by dialing (855) 859-2056 or (404)
537-3406 and entering passcode 19582570as well as on the
Company’s investor relations website.

About Restoration Hardware Holdings, Inc.

RH (Restoration Hardware Holdings, Inc. - NYSE:RH) is a curator of
design, taste and style in the luxury lifestyle market. The Company
offers collections through its retail galleries, source books, and
online at RH.com.

*Non-GAAP Financial Measures

To supplement its consolidated financial statements, which are prepared
and presented in accordance with Generally Accepted Accounting
Principles (“GAAP”), the Company uses the following non-GAAP financial
measures: adjusted operating income, adjusted EBITDA, adjusted net
income, adjusted EPS, pro forma EPS and adjusted diluted EPS
(collectively, “non-GAAP financial measures”). We compute these measures
by adjusting the applicable GAAP measures to remove the impact of
certain recurring and non-recurring charges and gains and the tax effect
of these adjustments. The presentation of this financial information is
not intended to be considered in isolation or as a substitute for, or
superior to, the financial information prepared and presented in
accordance with GAAP. The Company uses these non-GAAP financial measures
for financial and operational decision making and as a means to evaluate
period-to-period comparisons. The Company believes that they provide
useful information about operating results, enhance the overall
understanding of past financial performance and future prospects, and
allow for greater transparency with respect to key metrics used by
management in its financial and operational decision making. The
non-GAAP financial measures used by the Company in this press release
may be different from the methods used by other companies.

For more information on the non-GAAP financial measures, please see the
Reconciliation of GAAP to non-GAAP Financial Measures tables in this
press release. These accompanying tables include details on the GAAP
financial measures that are most directly comparable to non-GAAP
financial measures and the related reconciliations between these
financial measures. With respect to the Company’s adjusted net income
and adjusted diluted EPS guidance for the fourth fiscal quarter and the
full year of fiscal 2013, the Company is not able to provide a
reconciliation of these non-GAAP financial measures to GAAP without
unreasonable effort as our estimated results are preliminary and may
change as we complete the quarter close process and management’s review
of our financial statements.

Forward-Looking Statements

This release contains forward-looking statements within the meaning of
the federal securities laws including statements related to the
transformation of our real estate, the Company’s plans to open Full Line
Design Galleries in Greenwich, Atlanta and Los Angeles in 2014, the
Company’s belief that it can open 10 or more locations a year beginning
in 2015, the impact of the Company’s Source Book strategy on future
financial results, and the Company’s future financial guidance,
including for the fourth fiscal quarter of 2013 and the full year ending
February 1, 2014. You can identify forward-looking statements by the
fact that they do not relate strictly to historical or current facts.
These statements may include words such as “anticipate,” “estimate,”
“expect,” “project,” “plan,” “intend,” “believe,” “may,” “will,”
“should,” “likely” and other words and terms of similar meaning in
connection with any discussion of the timing or nature of future events.
We cannot assure you that future developments affecting us will be those
that we have anticipated. Important risks and uncertainties that could
cause actual results to differ materially from our expectations include,
among others, our ability to retain key personnel, general economic
conditions and the impact on consumer confidence and spending, changes
in customer demand for our products, our ability to anticipate consumer
preferences and buying trends, risks related to the number of new
business initiatives we are undertaking, risks in the implementation or
our real estate portfolio transformation, delays in store openings,
risks related to “conflict minerals” compliance and its impact on
sourcing, if any, as well as those risks and uncertainties disclosed
under the sections entitled “Risk Factors” and “Management’s Discussion
and Analysis of Financial Condition and Results of Operations” in
Restoration Hardware Holdings’ Form 10-K filed with the Securities and
Exchange Commission on April 29, 2013, and similar disclosures in
subsequent reports filed with the SEC, which are available on our
investor relations website at ir.restorationhardware.com and on the SEC
website at www.sec.gov.
Any forward-looking statement made by us in this press release speaks
only as of the date on which we make it. We undertake no obligation to
publicly update any forward-looking statement, whether as a result of
new information, future developments or otherwise, except as may be
required by any applicable securities laws.

RESTORATION HARDWARE HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

(Unaudited)

Three Months Ended

Nine Months Ended

November 2,2013

% of NetRevenues

October 27,2012

% of NetRevenues

November 2,2013

% of NetRevenues

October 27,2012

% of NetRevenues

Net revenues

$

395,832

100.0

%

$

284,171

100.0

%

$

1,079,267

100.0

%

$

794,991

100.0

%

Cost of goods sold

255,032

64.4

%

182,291

64.1

%

697,364

64.6

%

503,716

63.4

%

Gross profit

140,800

35.6

%

101,880

35.9

%

381,903

35.4

%

291,275

36.6

%

Selling, general and administrative expenses

116,940

29.5

%

99,886

35.2

%

385,312

35.7

%

271,716

34.1

%

Income (loss) from operations

23,860

6.1

%

1,994

0.7

%

(3,409

)

-0.3

%

19,559

2.5

%

Interest expense

(2,165

)

-0.6

%

(1,544

)

-0.5

%

(4,196

)

-0.4

%

(4,598

)

-0.6

%

Income (loss) before income taxes

21,695

5.5

%

450

0.2

%

(7,605

)

-0.7

%

14,961

1.9

%

Income tax expense (benefit)

12,146

3.1

%

(1,235

)

-0.4

%

842

0.1

%

(612

)

-0.1

%

Net income (loss)

$

9,549

2.4

%

$

1,685

0.6

%

$

(8,447

)

-0.8

%

$

15,573

2.0

%

Weighted-average shares used in computing basic net income (loss)
per share

38,888,208

1,000

38,558,952

1,000

Basic net income (loss) per share

$

0.25

$

1,685

$

(0.22

)

$

15,573

Weighted-average shares used in computing diluted net income (loss)
per share

[a] On a pro forma basis, basic and diluted shares outstanding for the
three and nine months ended October 27, 2012 include (1) the impact of
the Company’s reorganization, as further described in the Company’s
final prospectus filed with the Securities and Exchange Commission on
November 5, 2012 (the “Reorganization”), as well as (2) the 4,782,609
shares of common stock that the Company issued and sold on November 7,
2012 in its initial public offering, as if such events had been
completed as of the beginning of the respective periods and the common
stock resulting therefrom was outstanding for the respective periods.

Total leased selling square footage at end of period (in thousands) [e]

521

502

521

502

Direct:

Catalogs circulated (in thousands) [f]

4,330

11,721

12,325

26,851

Catalog pages circulated (in millions) [f]

892

7,944

6,583

15,360

Direct as a percentage of net revenues [g]

46

%

44

%

47

%

46

%

[a] Store data represents retail stores plus outlet stores. Net revenues
for outlet stores for the three months ended November 2, 2013 and
October 27, 2012 were $22.4 million and $13.9 million, respectively. Net
revenues for outlet stores for the nine months ended November 2, 2013
and October 27, 2012 were $57.5 million and $38.2 million, respectively.

[b] Retail data has been calculated based upon retail stores, which
includes our Baby & Child stores and excludes outlet stores.

[c] Comparable store sales have been calculated based upon retail stores
that were open at least fourteen full months as of the end of the
reporting period and did not change square footage by more than 20%
between periods. If a store is closed for seven days during a month,
that month will be excluded from comparable store sales. Comparable
store net revenues exclude revenues from outlet stores.

[d] Retail sales per leased selling square foot is calculated by
dividing total net revenues for all retail stores, comparable and
non-comparable, by the average leased selling square footage for the
period.

[f] The catalogs and catalog pages circulated from period to period do
not take into account different page sizes per catalog distributed. Page
sizes and page counts vary for different catalog mailings and we
sometimes mail different versions of a catalog at the same time.
Accordingly, period to period comparisons of catalogs circulated and
catalog pages circulated do not take these variations into account.

[g] Direct revenues include sales through our catalogs and websites.

RESTORATION HARDWARE HOLDINGS, INC.

RECONCILIATION OF ADJUSTED INCOME STATEMENT ITEMS

(In thousands, except share and per share amounts)

(Unaudited)

Three Months Ended

ReportedNovember 2,2013

Adjustments

AdjustedNovember 2,

2013

% of Net Revenues

ReportedOctober 27,

2012

Adjustments

AdjustedOctober 27,2012

% of Net Revenues

Net revenues

$

395,832

$ —

$

395,832

100.0

%

$

284,171

$

—

$

284,171

100.0

%

Cost of goods sold

255,032

—

255,032

64.4

%

182,291

—

182,291

64.1

%

Gross profit

140,800

—

140,800

35.6

%

101,880

—

101,880

35.9

%

Selling, general and administrative expenses [a]

116,940

—

116,940

29.6

%

99,886

(3,987

)

95,899

33.8

%

Income from operations

23,860

—

23,860

6.0

%

1,994

3,987

5,981

2.1

%

Interest expense

(2,165

)

—

(2,165

)

-0.5

%

(1,544

)

—

(1,544

)

-0.5

%

Income before income taxes

21,695

—

21,695

5.5

%

450

3,987

4,437

1.6

%

Income tax expense (benefit) [b]

12,146

(3,468

)

8,678

2.2

%

(1,235

)

3,010

1,775

0.7

%

Net income [c]

$

9,549

$

3,468

$

13,017

3.3

%

$

1,685

$

977

$

2,662

0.9

%

EBITDA [d]

$

30,591

$

30,591

$

8,587

$

12,973

Weighted-average shares used in computing basic net income per share [e]

38,888,208

38,888,208

1,000

36,971,500

Weighted-average shares used in computing diluted net income per
share [e]

41,053,211

41,053,211

1,000

36,971,500

Basic net income per share

$

0.25

$

0.33

$

1,685

$

0.07

Diluted net income per share

$

0.23

$

0.32

$

1,685

$

0.07

[a] The adjustments for selling, general, and administrative expenses
include management and pre-initial public offering board fees, certain
non-cash and other one-time compensation, follow-on offering fees, lease
termination costs and special committee investigation and remediation
costs. See table titled “Reconciliation of GAAP Net Income (Loss) to
Adjusted Net Income” for additional details.

[b] Assumes a normalized tax rate of 40% for all periods presented. See
table titled “Reconciliation of GAAP Net Income (Loss) to Adjusted Net
Income” for additional details.

[c] Adjusted net income is a supplemental measure of financial
performance that is not required by, or presented in accordance with,
GAAP. We define adjusted net income as consolidated net income (loss)
less non-recurring and other items. Adjusted net income is included in
this press release because management believes that adjusted net income
provides meaningful supplemental information for investors regarding the
performance of our business and facilitates a meaningful evaluation of
actual results on a comparable basis with historical results. Our
management uses this non-GAAP financial measure in order to have
comparable financial results to analyze changes in our underlying
business from quarter to quarter.

[d] EBITDA and Adjusted EBITDA are supplemental measures of financial
performance that are not required by, or presented in accordance with,
GAAP. We define EBITDA as consolidated net income (loss) before
depreciation and amortization, interest expense and provision for income
taxes. Adjusted EBITDA reflects further adjustments to EBITDA to
eliminate the impact of certain items including non-cash or other items
that we do not consider representative of our ongoing financial
performance. EBITDA and Adjusted EBITDA are included in this press
release because they are key metrics used by management and our Board of
Directors to assess our financial performance, and Adjusted EBITDA is
used in connection with determining incentive compensation under our
Management Incentive Program (“MIP”). Additionally, EBITDA is frequently
used by analysts, investors and other interested parties to evaluate
companies in our industry. We believe that Adjusted EBITDA provides
useful information facilitating operating performance comparisons from
period to period and company to company. We use EBITDA and Adjusted
EBITDA, alongside other GAAP measures such as gross profit, operating
income (loss) and net income (loss), to measure profitability, as a key
profitability target in our annual and other budgets, and to compare our
performance against that of peer companies. Please see the table titled
“Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA” for
further information.

[e] On an adjusted basis for the three months ended October 27, 2012,
basic and diluted shares outstanding include (1) the impact of the
Reorganization, as well as (2) the 4,782,609 shares of common stock that
the Company issued and sold on November 7, 2012 in its initial public
offering, as if such events had been completed as of the beginning of
the period and the common stock resulting therefrom was outstanding for
the period.

RESTORATION HARDWARE HOLDINGS, INC.

RECONCILIATION OF ADJUSTED INCOME STATEMENT ITEMS

(In thousands, except share and per share amounts)

(Unaudited)

Nine Months Ended

ReportedNovember 2,2013

Adjustments

AdjustedNovember 2,

2013

% of Net Revenues

ReportedOctober 27,

2012

Adjustments

Adjusted

October 27,

2012

% of Net Revenues

Net revenues

$

1,079,267

$

—

$

1,079,267

100.0

%

$

794,991

$

—

$

794,991

100.0

%

Cost of goods sold

697,364

—

697,364

64.6

%

503,716

—

503,716

63.4

%

Gross profit

381,903

—

381,903

35.4

%

291,275

—

291,275

36.6

%

Selling, general and administrative expenses [a]

385,312

(66,050

)

319,262

29.6

%

271,716

(7,677

)

264,039

33.2

%

Income (loss) from operations

(3,409

)

66,050

62,641

5.8

%

19,559

7,677

27,236

3.4

%

Interest expense

(4,196

)

—

(4,196

)

-0.4

%

(4,598

)

—

(4,598

)

-0.6

%

Income (loss) before income taxes

(7,605

)

66,050

58,445

5.4

%

14,961

7,677

22,638

2.8

%

Income tax expense (benefit) [b]

842

22,536

23,378

2.2

%

(612

)

9,668

9,056

1.1

%

Net income (loss) [c]

$

(8,447

)

$

43,514

$

35,067

3.2

%

$

15,573

$

(1,991

)

$

13,582

1.7

%

EBITDA [d]

$

16,550

$

82,600

$

39,044

$

47,870

Weighted-average shares used in computing basic net income (loss)
per share [e]

38,558,952

38,558,952

1,000

36,971,500

Weighted-average shares used in computing diluted net income (loss)
per share [e]

38,558,952

40,170,430

1,000

36,971,500

Basic net income (loss) per share

$

(0.22

)

$

0.91

$

15,573

$

0.37

Diluted net income (loss) per share

$

(0.22

)

$

0.87

$

15,573

$

0.37

[a] The adjustments for selling, general, and administrative expenses
include management and pre-initial public offering board fees, certain
non-cash and other one-time compensation, follow-on offering fees, lease
termination costs and special committee investigation and remediation
costs. See table titled “Reconciliation of GAAP Net Income (Loss) to
Adjusted Net Income” for additional details.

[b] Assumes a normalized tax rate of 40% for all periods presented. See
table titled “Reconciliation of GAAP Net Income (Loss) to Adjusted Net
Income” for additional details.

[c] Adjusted net income is a supplemental measure of financial
performance that is not required by, or presented in accordance with,
GAAP. We define adjusted net income as consolidated net income (loss)
less non-recurring and other items. Adjusted net income is included in
this press release because management believes that adjusted net income
provides meaningful supplemental information for investors regarding the
performance of our business and facilitates a meaningful evaluation of
actual results on a comparable basis with historical results. Our
management uses this non-GAAP financial measure in order to have
comparable financial results to analyze changes in our underlying
business from quarter to quarter.

[d] EBITDA and Adjusted EBITDA are supplemental measures of financial
performance that are not required by, or presented in accordance with,
GAAP. We define EBITDA as consolidated net income (loss) before
depreciation and amortization, interest expense and provision for income
taxes. Adjusted EBITDA reflects further adjustments to EBITDA to
eliminate the impact of certain items including non-cash or other items
that we do not consider representative of our ongoing financial
performance. EBITDA and Adjusted EBITDA are included in this press
release because they are key metrics used by management and our Board of
Directors to assess our financial performance, and Adjusted EBITDA is
used in connection with determining incentive compensation under our
MIP. Additionally, EBITDA is frequently used by analysts, investors and
other interested parties to evaluate companies in our industry. We
believe that Adjusted EBITDA provides useful information facilitating
operating performance comparisons from period to period and company to
company. We use EBITDA and Adjusted EBITDA, alongside other GAAP
measures such as gross profit, operating income (loss) and net income
(loss), to measure profitability, as a key profitability target in our
annual and other budgets, and to compare our performance against that of
peer companies. Please see the table titled “Reconciliation of Net
Income (Loss) to EBITDA and Adjusted EBITDA” for further information.

[e] On an adjusted basis for the nine months ended October 27, 2012,
basic and diluted shares outstanding include (1) the impact of the
Reorganization, as well as (2) the 4,782,609 shares of common stock that
the Company issued and sold on November 7, 2012 in its initial public
offering, as if such events had been completed as of the beginning of
the period and the common stock resulting therefrom was outstanding for
the period.

RESTORATION HARDWARE HOLDINGS, INC.

RECONCILIATION OF NET INCOME TO OPERATING INCOME (LOSS)

AND ADJUSTED OPERATING INCOME

(In thousands)

(Unaudited)

Three Months Ended

Nine Months Ended

November 2,2013

October 27,2012

November 2,2013

October 27,2012

Net income (loss)

$

9,549

$

1,685

$

(8,447

)

$

15,573

Interest expense

2,165

1,544

4,196

4,598

Income tax expense (benefit)

12,146

(1,235

)

842

(612

)

Operating income (loss)

23,860

1,994

(3,409

)

19,559

Management and pre-IPO board fees [a]

—

1,198

—

3,285

Non-cash compensation [b]

—

—

63,155

—

Follow-on offering fees [c]

—

—

2,895

—

Lease termination costs [d]

—

—

—

(386

)

Special committee investigation and remediation [e]

—

2,789

—

4,778

Adjusted operating income

$

23,860

$

5,981

$

62,641

$

27,236

[a] Represents fees paid in accordance with our management services
agreement with Home Holdings, LLC (“Home Holdings”), as well as fees and
expense reimbursements paid to our Board of Directors prior to the
initial public offering. All management fees were paid in full at the
time of the initial public offering. Board fees and expenses subsequent
to the initial public offering are not included in the above adjustments
and are included in both the operating and adjusted operating income
(loss) amounts.

[b] Includes non-cash compensation charges related to the
performance-based vesting of certain shares granted to Mr. Friedman, as
well as the one-time, fully vested option granted to Mr. Friedman upon
his reappointment as Chairman and Co-Chief Executive Officer in July
2013. All other equity related awards granted to employees are not
included in the above adjustments and are included in both the operating
and adjusted operating income (loss) amounts.

[c] Represents legal and other professional fees incurred in connection
with our follow-on offerings in May 2013 and July 2013.

[d] Includes lease termination costs for retail stores that were closed
prior to their respective lease termination dates. The amounts in the
three and nine months ended October 27, 2012 relate to changes in
estimates regarding liabilities for future lease payments for closed
stores.

[e] Represents legal and other professional fees, incurred in connection
with the investigation conducted by the special committee of the Board
of Directors relating to Mr. Friedman and our subsequent remedial
actions.

RESTORATION HARDWARE HOLDINGS, INC.

RECONCILIATION OF NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA

(In thousands)

(Unaudited)

Three Months Ended

Nine Months Ended

November 2,2013

October 27,2012

November 2,2013

October 27,2012

Net income (loss)

$

9,549

$

1,685

$

(8,447

)

$

15,573

Depreciation and amortization

6,731

6,593

19,959

19,485

Interest expense

2,165

1,544

4,196

4,598

Income tax expense (benefit)

12,146

(1,235

)

842

(612

)

EBITDA [a]

30,591

8,587

16,550

39,044

Management and pre-IPO board fees [b]

—

1,198

—

3,285

Non-cash compensation [c]

—

364

63,155

1,102

Follow-on offering fees [d]

—

—

2,895

—

Lease termination costs [e]

—

—

—

(386

)

Special committee investigation and remediation [f]

—

2,789

—

4,778

Other [g]

—

35

—

47

Adjusted EBITDA [a]

$

30,591

$

12,973

$

82,600

$

47,870

[a] EBITDA and Adjusted EBITDA are supplemental measures of financial
performance that are not required by, or presented in accordance with,
GAAP. We define EBITDA as consolidated net income (loss) before
depreciation and amortization, interest expense and provision for income
taxes. Adjusted EBITDA reflects further adjustments to EBITDA to
eliminate the impact of certain items including non-cash or other items
that we do not consider representative of our ongoing financial
performance. EBITDA and Adjusted EBITDA are included in this press
release because they are key metrics used by management and our Board of
Directors to assess our financial performance, and Adjusted EBITDA is
used in connection with determining incentive compensation under our
MIP. Additionally, EBITDA is frequently used by analysts, investors and
other interested parties to evaluate companies in our industry. We
believe that Adjusted EBITDA provides useful information facilitating
operating performance comparisons from period to period and company to
company. We use EBITDA and Adjusted EBITDA, alongside other GAAP
measures such as gross profit, operating income (loss) and net income
(loss), to measure profitability, as a key profitability target in our
annual and other budgets, and to compare our performance against that of
peer companies. EBITDA and Adjusted EBITDA are not GAAP measures of our
financial performance or liquidity and should not be considered as
alternatives to net income (loss), as a measure of financial
performance, cash flows from operating activities, as a measure of
liquidity, or any other performance measure derived in accordance with
GAAP and they should not be construed as an implication that our future
results will be unaffected by non-recurring and other items. Our
measures of EBITDA and Adjusted EBITDA are not necessarily comparable to
other similarly titled captions for other companies due to different
methods of calculation.

[b] Represents fees paid in accordance with our management services
agreement with Home Holdings, as well as fees and expense reimbursements
paid to our Board of Directors prior to the initial public offering. All
management fees were paid in full at the time of the initial public
offering. Board fees and expenses subsequent to the initial public
offering are not included in the above adjustments and are included in
both the EBITDA and Adjusted EBITDA amounts.

[c] The nine months ended November 2, 2013 include non-cash compensation
charges related to the performance-based vesting of certain shares
granted to Mr. Friedman, as well as the one-time, fully vested option
granted to Mr. Friedman upon his reappointment as Chairman and Co-Chief
Executive Officer in July 2013. The three and nine months ended October
27, 2012 includes stock-based compensation expense incurred prior to the
initial public offering. All other equity related awards granted to
employees subsequent to the initial public offering are not included in
the above adjustments and are included in both the EBITDA and Adjusted
EBITDA amounts.

[d] Represents legal and other professional fees incurred in connection
with our follow-on offerings in May 2013 and July 2013.

[e] Includes lease termination costs for retail stores that were closed
prior to their respective lease termination dates. The amounts in the
three and nine months ended October 27, 2012 relate to changes in
estimates regarding liabilities for future lease payments for closed
stores.

[f] Represents legal and other professional fees, incurred in connection
with the investigation conducted by the special committee of the Board
of Directors relating to Mr. Friedman and our subsequent remedial
actions.

[g] Represents certain other items which management believes are not
indicative of our ongoing operating performance, which includes foreign
exchange gains and losses for the three and nine months ended October
27, 2012.

RESTORATION HARDWARE HOLDINGS, INC.

RECONCILIATION OF GAAP NET INCOME (LOSS) TO ADJUSTED NET INCOME

(In thousands)

(Unaudited)

Three Months Ended

Nine Months Ended

November 2,2013

October 27,2012

November 2,2013

October 27,2012

GAAP net income (loss)

$

9,549

$

1,685

$

(8,447

)

$

15,573

Adjustments (pre-tax):

Management and pre-IPO board fees [a]

$

—

$

1,198

$

—

$

3,285

Non-cash compensation [b]

—

—

63,155

—

Follow-on offering fees [c]

—

—

2,895

—

Lease termination costs [d]

—

—

—

(386

)

Special committee investigation and remediation [e]

—

2,789

—

4,778

Subtotal adjusted items

—

3,987

66,050

7,677

Impact of income tax items [f]

3,468

(3,010

)

(22,536

)

(9,668

)

Adjusted net income [g]

$

13,017

$

2,662

$

35,067

$

13,582

[a] Represents fees paid in accordance with our management services
agreement with Home Holdings, as well as fees and expense reimbursements
paid to our Board of Directors prior to the initial public offering. All
management fees were paid in full at the time of the initial public
offering. Board fees and expenses subsequent to the initial public
offering are not included in the above adjustments and are included in
both the GAAP and adjusted net income (loss) amounts.

[b] Includes non-cash compensation charges related to the
performance-based vesting of certain shares granted to Mr. Friedman, as
well as the one-time, fully vested option granted to Mr. Friedman upon
his reappointment as Chairman and Co-Chief Executive Officer in July
2013. All other equity related awards granted to employees are not
included in the above adjustments and are included in both the GAAP and
adjusted net income (loss) amounts.

[c] Represents legal and other professional fees incurred in connection
with our follow-on offerings in May 2013 and July 2013.

[d] Includes lease termination costs for retail stores that were closed
prior to their respective lease termination dates. The amounts in the
three and nine months ended October 27, 2012 relate to changes in
estimates regarding liabilities for future lease payments for closed
stores.

[e] Represents legal and other professional fees, incurred in connection
with the investigation conducted by the special committee of the Board
of Directors relating to Mr. Friedman and our subsequent remedial
actions.

[f] Assumes a normalized tax rate of 40% for all periods presented.

[g] Adjusted net income is a supplemental measure of financial
performance that is not required by, or presented in accordance with,
GAAP. We define adjusted net income as consolidated net income (loss)
less non-recurring and other items. Adjusted net income is included in
this press release because management believes that adjusted net income
provides meaningful supplemental information for investors regarding the
performance of our business and facilitates a meaningful evaluation of
actual results on a comparable basis with historical results. Our
management uses this non-GAAP financial measure in order to have
comparable financial results to analyze changes in our underlying
business from quarter to quarter.

RESTORATION HARDWARE HOLDINGS, INC.

RECONCILIATION OF NET INCOME (LOSS) PER SHARE TO

ADJUSTED NET INCOME PER SHARE

(Unaudited)

Three Months Ended

Nine Months Ended

November 2,2013

October 27,2012

November 2,2013

October 27,2012

GAAP diluted net income (loss) per share

$

0.23

$

1,685

$

(0.22

)

$

15,573

Pro forma diluted net income (loss) per share [a]

$

0.23

$

0.05

$

(0.21

)

$

0.42

EPS impact of adjustments (pre-tax):

Management and pre-IPO board fees [b]

$

—

$

0.03

$

—

$

0.09

Non-cash compensation [c]

—

—

1.57

—

Follow-on offering fees [d]

—

—

0.07

—

Lease termination costs [e]

—

—

—

(0.01

)

Special committee investigation and remediation [f]

—

0.07

—

0.13

Subtotal adjusted items

—

0.10

1.64

0.21

Impact of income tax items [g]

0.09

(0.08

)

(0.56

)

(0.26

)

Adjusted diluted net income per share [h]

$

0.32

$

0.07

$

0.87

$

0.37

[a] Pro forma diluted net income (loss) per share for the three and nine
months ended November 2, 2013 is calculated based on GAAP net income
(loss) and diluted weighted-average shares of 41,053,211 and 40,170,430,
respectively. Pro forma diluted net income per share for the three and
nine months ended October 27, 2012 is calculated based on GAAP net
income and the Company’s vested share count as if (1) the Reorganization
and (2) initial public offering had been completed as of the beginning
of the respective periods and the common stock resulting therefrom was
outstanding for the respective periods.

[b] Represents fees paid in accordance with our management services
agreement with Home Holdings, as well as fees and expense reimbursements
paid to our Board of Directors prior to the initial public offering. All
management fees were paid in full at the time of the initial public
offering. Board fees and expenses subsequent to the initial public
offering are not included in the above adjustments and are included in
both the GAAP and adjusted net income (loss) amounts.

[c] Includes non-cash compensation charges related to the
performance-based vesting of certain shares granted to Mr. Friedman, as
well as the one-time, fully vested option granted to Mr. Friedman upon
his reappointment as Chairman and Co-Chief Executive Officer in July
2013. All other equity related awards granted to employees are not
included in the above adjustments and are included in both the GAAP and
adjusted net income (loss) amounts.

[d] Represents legal and other professional fees incurred in connection
with our follow-on offerings in May 2013 and July 2013.

[e] Includes lease termination costs for retail stores that were closed
prior to their respective lease termination dates. The amounts in the
three and nine months ended October 27, 2012 relate to changes in
estimates regarding liabilities for future lease payments for closed
stores.

[f] Represents legal and other professional fees, incurred in connection
with the investigation conducted by the special committee of the Board
of Directors relating to Mr. Friedman and our subsequent remedial
actions.

[g] Assumes a normalized tax rate of 40% for all periods presented.

[h] Adjusted diluted net income per share is a supplemental measure of
financial performance that is not required by, or presented in
accordance with GAAP. We define adjusted net income per share as
consolidated net income (loss) less non-recurring and other items
divided by the Company’s post-initial public offering share count.
Adjusted net income per share is included in this press release because
management believes that adjusted net income per share provides
meaningful supplemental information for investors regarding the
performance of our business and facilitates a meaningful evaluation of
actual results on a comparable basis with historical results. Our
management uses this non-GAAP financial measure in order to have
comparable financial results to analyze changes in our underlying
business from quarter to quarter.